Commodity Futures Trading Commission (CFTC) has imposed trading limits for trading in Intercontinental Exchange (ICE) Futures Europe’s WTI oil contract, a move designed to close the so-called London-loophole. However, while the move will be popular among senior US politicians, who have called for tighter CFTC control, analysts have said that the move will prove to be unsuccessful in deterring speculative trading, blamed by many for the record oil prices witnessed this year.
The US regulator revealed its change in policy towards ICE on June 17, when it released an amended no-action relief letter. The note directs the Atlanta exchange to adopt New York Mercantile Exchange (Nymex) equivalent position limits and accountability levels on WTI crude oil contract, while the exchange will have to report violations of any such provisions to the CFTC.
CFTC acting chairman, Walt Lukken, stressed that the move is important...